After four and a half years of intense wrangling and seemingly interminable negotiation, the UK has finally laid down the benefits and obligations of membership of the EU. On exit from the transition period on 31 December 2020 , the Brexit future has arrived.
That future has come in the shape of a deal, the Trade and Cooperation Agreement, the final elements of which were pinned down on Christmas Eve. The confusion, cost and uncertainty of a No Deal outcome were avoided at the last minute. Moreover, the deal on the face of it delivers comprehensively the promises made by the Leave campaign in 2016 and volubly by Brexiteers since.
The UK will no longer be bound by the jurisdiction of the European Court of Justice. The UK will no longer pay into the EU budget. The UK will control its own borders for immigration purposes. The UK will be free to sign up to trade deals with other countries round the world and to set its own regulatory regime. All this, and with a trade deal that delivers zero tariff and zero quota trade with the EU.
This by any reckoning is Brexit done. And so, with a great sigh of relief, can we all now move on from the issue?
If only life was so simple. Despite meeting the headline demands of the Leave campaign, this deal is not quite the clean break of many a Brexiteer daydream. As with any trade deal, the benefits come with obligations. While UK regulation may in the future diverge from the standards set in the EU, this freedom will come at a cost, in terms of remedial action allowed to the EU to redress any competitive imbalance. Overall, this is a complex deal which will require constant negotiation to sustain it in working order, overseen by a Partnership Council and a plethora of technical committees to handle the detail.
Much of this will be relatively low level and won’t garner headlines. But it will not always be comfortable for the UK. The two sides will meet as sovereign equals, but one side will carry far greater economic clout. Now a third country, the UK will struggle to ensure that the future direction of EU regulation, be it on financial services, automotive or any other sector, suits the interests of UK-based businesses.
The relatively greater dependency of the UK on trade with the EU – about 13% of GDP compared to 3-4% for the EU – will mean that the cost of pursuing a material divergence in standards is always going to weigh more heavily on the UK. Given all the emphasis placed by the UK government on sovereignty through the recent negotiations, every wrangle with the EU and every adjustment to the terms of the deal will be a potentially painful reminder that all trade deals involve a constraint of sovereignty in return for economic gain.
Nor can the UK defy its geography and centuries of history and seek to detach itself from the affairs of the continent. The UK’s interests in geo-political terms will remain bound to those of the EU. Sometimes the UK will be able to use the flexibility that comes with being outside the EU to set the pace in response to emerging international issues. But, more often than not, it will be in the UK’s interests to seek to align its position with that of the EU. Securing a common approach that reflects particular UK interests will be that much harder from outside the tent.
The extent of these interactions, and the way they will intrude into UK politics, will surprise many who have assumed that Brexit has banished the EU from our political discourse for good. That surprise is unlikely to be welcome. If the Swiss experience is anything to go by, dealing with the EU from outside can be a narky business. The tetchy nature of the relationship probably won’t engender buyer’s remorse among many Brexiteers: support for joining the EU has dropped in Switzerland from around half in 1992 to just 10% today.
Nor is it likely that the economic impact of Brexit will translate into short-term Brexit regrets. On many estimates, the deal now done will lead to a headline loss of GDP of between 4 and 6% over the next 15 years or so from what it would have been if the UK had stayed in the EU. There will be some compensation if the UK manages to outperform the EU in striking trade deals with other countries. One of the biggest, with the US, will deliver an upside to GDP of just 0.16%, requiring well over 20 such equivalent deals to make up for that lost growth from leaving the Single Market.
But the impact of lost growth will be occluded in the short-term by the likely bounce back from Coronavirus-induced recession. In the longer term, its effects will be far from visible; the impact is lost potential growth, not an actual fall in GDP, and we are unlikely to miss so much what we’ve never had. Amidst claim and counterclaim about the costs of Brexit, the economic case to reverse the decision will be hard to sustain.
Despite the undoubted economic impact it will have, we are unlikely to see any momentum in the medium-term to undo Brexit. For sure, there may be times in the years ahead when a British Prime Minister believes it to be in the national interest to improve on the relationship established by the Trade and Cooperation Agreement. But any such rapprochement is likely to be intermittent and hesitant, at least for the foreseeable future.
The question remains, however, whether the form of Brexit achieved will meet the aspirations of those who in their millions voted to leave the EU. The Government can credibly claim to have taken back control. Is that sufficient in and of itself?
On one level, the answer to that must be yes. For those for whom the jurisdiction of the European Court of Justice (ECJ) or the compromises inherent in a system of qualified majority voting was an affront to British sovereignty, this Brexit outcome surely delivers, even if the UK will be poorer than it otherwise might have been as a result.
But what of those whose support for Brexit was founded on deeper anxieties, about Britain’s place in the world, about the perceived occlusion of English identity, about inequality, about disenfranchisement, about immigration, or about the loss of national agency in an increasingly uncertain world?
It is the great paradox of Brexit that the UK’s new state in the world will not make dealing with those anxieties any easier. There can be no return to a time, long before the UK joined the European Economic Community (EEC), when Britain could still assume at least the trappings of great power status. For sure, the UK will still retain diplomatic and military clout, but as a middle ranking power and one less able, outside the EU, to assert its voice through joint action with one of the world’s major power blocks.
Internally, Brexit has further shaken the already fragile coherence of the United Kingdom itself. Far from a clear reassertion of the sovereignty of the Anglo-British Parliament, the post-Brexit future is likely to see a noisy competition over different versions of sovereignty, in Scotland, Wales and Northern Ireland. For those for whom Brexit was in part about the reassertion of an English identity, this will provide no resolution to England’s place in the Union.
Like many before it, this UK government recognises in its ‘levelling up’ agenda the need to address the socio-economic divisions that have long riven the country. Brexit does not add much to its arsenal for doing so. Investment in skills and infrastructure, in science and innovation and in the public realm were not impeded by the UK’s membership of the EU. Nor was the capacity to devolve more powers to the cities and counties of England, if, indeed, the government decides to push ahead with that agenda.
Brexit will not lead by any straightforward route to a reduction in regional disparities within the UK. Indeed, in some ways, it will make the job of addressing these harder. By disrupting integrated manufacturing supply chains, Brexit will be a drag on investment in the very parts of the country that need it most. Overall, slower growth will also reduce the firepower of the Exchequer to fund the schemes that support ‘levelling up’.
Even on immigration, the scorecard remains equivocal. Some industries will be hurt by the loss of ready access to labour from EU member states, but the drying up of that pool will not reduce the overall reliance of much of the UK economy on migrant labour. Immigration from the rest of the world shows no sign of letting up. We are very far from having had the national debate that resolves what the ‘right’ level of immigration might be for the UK in the medium-term future.
Brexit resolved a question in the negative; it took the UK out of the EU. It has not created a visible and viable platform from which to address the discontents that underpinned the vote for Brexit.
Does that matter? Has Brexit exhausted the political energy generated by that dissatisfaction with the state of the body politic? Will discontent revert to a grumbling, but passive, acquiescence with the world as it now becomes?
Or, is the political turbulence that drove the vote to leave the EU still with us? If so, how will it find expression in post-Brexit British politics? Brexit may have settled its own question, but it leaves many others unresolved.
About the author
Philip Rycroft, Distinguished Honorary Researcher at the Bennett Institute for Public Policy and POLIS
Philip Rycroft worked in DExEU from March 2017 to March 2019, from October 2017 as its Permanent Secretary. He was responsible for leading the department in all its work on the Government’s preparations for Brexit. From June 2015 to March 2019 he was head of the ... Learn more